Oct 1, 2018. Bond Bear

–Stocks are rallying and bonds are down as a new Nafta agreement was inked.  Canada dollar is seeing a strong run higher while gold is below 1190 and appears vulnerable to new lows.
–Rates eased on Friday though net changes were small.  Curve steepened late.  For example, 5/30 jumped 2.7 bps to 25.1, as the 5y fell 1.5 bps and the 30y rose  1.2.  USZ8 is pressing lower, now 139-25 against a low last week (low of the move so far) of 139-17.  The Fed’s balance sheet normalization program kicks up another $10 billion per month in Q4 to $50 billion per month, while the ECB further pares back its buying.   The 3.25% yield level on the 30-year bond has acted as a cap since 2015.  See chart below.  A close above should cause the yield to vault to 3.50/3.55 quickly.  If this action should develop, red/green and red/blue pack spreads will certainly move from negative to positive values.
–ISM Mfg today expected slightly lower at 60.3 from 61.3.  Bostic and Rosengren speak.
Posted on October 1, 2018 at 5:18 am by alexmanzara · Permalink
In: Eurodollar Options

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